Tata Consultancy Services building. (Image: PTI)
War for talent is one of the key themes characterising 2021 as the tech sector is facing a severe talent crunch for skills in digital.
But not India's largest IT services firm Tata Consultancy Services (TCS). The company depends significantly on internal fulfilment, and, hence, supply-chain constraints is not a challenge, CEO Rajesh Gopinathan said during an earnings call. And this, even as the company saw total contracts worth $9.2 billion in Q4 FY21 -- an all-time high.
With over a 10 percent year-on-year (YoY) growth in revenues at $5.989 billion, the company has closed the year on a strong note. TCS added over 40,000 employees in FY21 and 19,388 between January and March 2021, the highest ever in a quarter.
Why are we talking about war for talent?
Demand for technology professionals has far outstripped the supply as enterprises across the world invest in technology. Brokerage firm Kotak Institutional Equities in a note said that the IT industry might need to hire 400,000 to meet the growth expectations.
However, there is only a limited talent pool with digital skills, which are in demand. This is what is resulting in the war for talent as companies struggle to hire quality talent and are now forced to pay a premium for the same.
But TCS’ statement is in contrast to sentiments from other industry executives, some of whom have pointed out that talent is one of the key challenges, given the increasing demand and limited pool available for the niche skill.
Where does TCS’ confidence stem from? There are a couple of factors.
Emphasis on build
TCS is one of the largest campus recruiters. It hired 40,000 in FY21. In an earlier interaction with Moneycontrol, V Ramakrishnan, CFO, said that the company will hire 40,000 more from campuses in FY22 as well.
Its peer Infosys hired 16,500 last year and will hire 24,000 in FY22, said UB Pravin Rao, COO. HCL Tech plans to hire 12,000 this fiscal. Wipro does not disclose fresher hiring plans but reports suggest that the company planned to hire 12,000 in FY21.
Given the large fresher intake, over the last few years, TCS has invested heavily in training and development initiatives to keep talent and technology ready in a short time. This includes cutting down classroom training for freshers and deploying them faster on projects after they are on-boarded.
One such initiative to cut down classroom training time is through the platform FrescoPlay, which uses analytics to design individual-focused training programmes. According to a BusinessLine report, the company has been able to cut down classroom training, which lasts a few months, by as much as 80 percent.
According to sources Moneycontrol spoke to, the idea is to have ready-to-be-deployed freshers. Between recruiting and on-boarding, there is a gap of a few months. Now IT firms are looking to utilise that time to train candidates before on-boarding them.
However, it does not stop there. Once these freshers are deployed in projects, new recruits and employees continue their upskilling journey. These employees’ skills are measured using the T Factor score, which is a combination of domain and technology expertise.
A senior company executive pointed out that these initiatives have helped in improving the internal fulfilment rate even as demand increased over the last few months.
National Qualifier Test (NQT)
NQT is an assessment platform designed by TCS iON to measure candidates’ cognitive ability, and skill expertise. People who are in their final and pre-final year and up to two years of work experience can apply for the test. Apart from Tata group companies like TCS and Titan, other firms such as Happiest Minds use NQT for hiring.
According to industry experts, NQT will also aid in bridging talent gap. “Through NQT, TCS has a huge database for candidates. Whenever a need arises, TCS can extend offers to candidates who have taken the test and that would, to some extent, solve the talent problem,” added experts.
Low attrition rates
TCS continues to have a low attrition rate in the industry, compared to its peers even before the pandemic.
Even before the pandemic, TCS was able to contain its attrition rate at 11.5 percent in Q1 FY20, whereas its peers reported high rates. Infosys’ was as high as 20 percent and Wipro’s and HCL Tech’s around 17 percent each.
The company reported an attrition rate of 7.2 percent for the quarter ending March 2021 and 7.6 percent for the previous quarter. Infosys posted 10 percent attrition for the quarter ending December 2020 and Wipro 11 percent. HCL Tech’s attrition stood at 11.2 percent for the quarter ending December.
CFO Ramakrishnan said during the earnings call that the attrition rate is likely to inch up with more opportunities in the market. However, higher retention of its existing workforce, compared to its peers, will also help the company address talent issues.